Question

9. (12 points) The records of Riverbed’s Boutique report the following data for the month of April. Sales revenue $106,300 Purchases (at cost) $51,500 Sales returns 2,100 Purchases (at sales price) 88,500 Markups 10,100 Purchase returns (at cost) 2,100 Markup cancellations 1,700 Purchase returns (at sales price) 3,000 Markdowns 9,800 Beginning inventory (at cost) 17,564 Markdown cancellations 2,900 Beginning inventory (at sales price) 42,500 Freight on purchases 2,600 Compute the ending inventory as indicated below. (Round ratios for computational purposes to 0 decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.) a. Ending inventory using conventional (LCM) retail inventory method b. Ending inventory using LIFO retail inventory method

9. (12 points) The records of Riverbed's Boutique report the following data for the month of April. Sales revenue $106,300 Sales returns 2,100 Markups - 10,100 Markup cancellations - 1,700 Markdowns 9,800 Markdown cancellations – 2,900 Freight on purchases 2,600 Purchases (at cost) Purchases (at sales price) Purchase returns (at cost) - Purchase returns (at sales price) Beginning inventory (at cost) Beginning inventory (at sales price) $51,500 88,500 2,100 3,000 17,564 42,500 - Compute the ending inventory as indicated below. (Round ratios for computational purposes to O decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.) a. Ending inventory using conventional (LCM) retail inventory method b. Ending inventory using LIFO retail inventory method

Answer 1

Answer
Ending inventory by the conventional retail inventory method
		Cost		Retail
Beginning inventory		$     17,564		$         42,500
Purchases		$     51,500		$         88,500
Purchase returns		$      -2,100		$         -3,000
Freight on purchases		$       2,600
Totals		$     69,564		$      1,28,000
Add: Net markups
Markups	$ -		$     10,100
Markups Cancellations	$ -	$             -	$      -1,700	$           8,400
		$     69,564		$      1,36,400
Deduct : net markups
Markdowns	$ -		$       9,800
Markdown cancellation	$ -		$      -2,900
Net markdowns		$             -		$           6,900
Sales price of goods available				$      1,29,500
Deduct: Net sales (106300-2100)				$      1,04,200
Ending inventory at retail				$         25,300
Cost to retail = 69,564 / 136,400
51%
Ending inventory at retail = $ 25,300
Ending inventory at cost = $ 25,300 * cost to retail ratio
= $ 25,300 * 51 %
= $ 12,903.